Starting a business is tough. Everyone knows this. And, I’ve learnt it the hard way. I’ve built a fair number of products and even successfully brought five of them to market. “Five products” might sound like a lot at first, but it’s actually nothing compared to the number of products and ideas I’ve dismissed. Dismissing bad or even “good” ideas is one of the best things you can do as an entrepreneur because the “good” ideas always steal from the best ideas. Start with absolutely the best idea you can.
So, how do you know if you have the right idea or just a “good” one? With these five lessons, I’ll show you how I learned to see the difference. If I had known and truly understood these lessons from the very beginning, it would have given me five more years to work on my best idea.
1. Embrace the problem.
I often find myself saying sentences starting with: “I would like to do . . .” This sounds harmless at first, but is actually pretty dangerous because it’s solution-centric. A better way to start a sentence would be: “Isn’t it ridiculous that people are still dealing with X problem in 2017?” That’s problem-centric and has a lot of advantages.
I look at the current AI trend and, as someone that has a lot of experience in this field, I get really excited. People are attempting to work AI into virtually everything, but it would be better to find the few big problems where AI can remove a real pain for people. When I look closely at it, I sometimes find that I could solve a problem and serve customers better without any AI at all.
The best ideas often come when you’re looking to solve a problem you’ve had yourself. It’s how many great companies got started: Airbnb started when a guy slept on the founders air mattress during a conference. Larry Page and Sergey Brin wanted a better way to search the internet. Kevin Systrom just wanted to make it easy to create and share beautiful pictures (hello, Instagram).
The main difference between these companies and the AI trend is that they were problem-focused from the beginning. If you are following a trend like AI, wearables, IoT etc., you’re probably focusing too much on the solution and not enough on the problem. While it may be great to be able to have a conversation with your refrigerator, do you need to? I’m pretty sure a shopping list taped to the front of it would probably be easier, because who doesn’t have a pen and paper?
As tempting (and adorable) as it may be, creating an app that filters different puppy breeds over your selfies isn’t going to pay the bills. It may go viral for a while, but in the end it’ll likely not have staying power. Plus, Snapchat could erase your market in a heartbeat. There are thousands of apps and websites that fulfil humanity’s seemingly inherent need for cuteness, for fun or for vanity. But, rarely are they the kind of tool that becomes a necessary part of people’s daily lives.
2. Embrace competition.
I can remember my first time finding a competitor. I was three months into a new project and was browsing the web on a late winter’s evening. And, there it was: The exact same idea, the same solution, but years ahead of me. I was shocked. I couldn’t sleep that night. “How can I possibly get ahead? Or should I quit immediately?”
Fast forward: Today, I not only accept the fact that there is always competition, but also know it’s a good sign when there is (and a big red flag when there isn’t). Even more so: I embrace it. I (try to) start to fall in love with the solutions of my competitors. After all, we are working on the same problem, and they are usually passionate about solving it, too! Having competition proves that there’s a market for your idea. You just need to be better than the existing products on the market. When I started thinking about our latest product, Zenkit, we created a list of over 200 competing products. We learned both the good and the bad things from them.
Whenever I talk to other people in the startup community, I ask, “Why do you think it will make money?” The answer is usually some variation of “Because no one else is doing it!” I’ve heard this many times over my 25-plus years in the business. While I would love to believe that brand new ideas that no one has thought of will continue to come our way, I don’t think that’s usually the case. If no one else is doing it, it means one of two things: Either the guy I’m talking to doesn’t have a complete view of the market, or there isn’t a market in the first place. Google wasn’t the first, Amazon wasn’t the first, and neither was Facebook. They each took an idea and made it better. Good artists copy, and great artists steal ideas.
What happened to that first project I mentioned, you may ask? In that particular case, I quit a week later. Today, I know why: I was in love with the solution and not the problem (see lesson 1).
3. Tell people about it.
I mentor a lot of startups in my local community here in southern Germany. I can almost instantly tell a founder’s personal process by how open they are in talking about their projects.
If they’re talking about NDAs, I know they need more time. I don’t want to pry into all the inner workings of what they’re trying to do, but I need to understand enough to give usable advice. This is really important. Many entrepreneurs think that they need to keep their idea a secret to keep people from stealing it. So I always ask what the problem is that they’re trying to fix and explain that to me instead. Unfortunately, often times I realize that they don’t have a clue about the problem (see lesson 1) or the competition (see lesson 2).
Most ideas have already been thought of, and probably even attempted. The reason you need to tell people about your idea is because you need to validate your idea and make sure it alleviates a real pain for people.
Feedback is absolutely key. It’s all well and good to think that you can develop a product under the radar, and on some magical date in the future, go public and take over the world. The problem is that you’ll have no feedback on whether your final product actually fixes the problem you’re trying to fix. And, you can’t know that until enough people have seen it and told you how, or even if, it helped them. So get your idea out there, get as many people as you can to test it and don’t waste time worrying that someone will copy you. If they do, then they’re further validating your concept — now you just need to work hard to make the best version! Out-performing and executing will almost always win over the first mover in a space.
4. Listen to your customers.
Customers show you the pain and the problem that you’ll need to solve. When I built our first product, Chilibase, it was loved by the press. Everyone was telling me how great it was. I felt great about it, too. Chilibase was built as the first social graph for emails. However, in talking with our customers about it, I got the same feedback nearly every time: “Chilibase is cool, but what I really need is a good way to search through my emails!”
Since Chilibase couldn’t do that, it inspired me to develop Lookeen. Our customers were telling me where it hurt, and it wasn’t where I originally thought it was. At the end of the day, Chilibase was nice to have, but what our customers really needed was a search tool.
The search tool that we built has been successful specifically because we listened to our customers. If you don’t, not only will you miss opportunities, but you might do something much worse: Build a solution without a problem.
5. It gets easier. And it’s worth it.
Using the first four idea filters above, I’m able to zero in on an idea that I’m passionate about, that solves a real problem for people and that has a good chance of making money.
Being passionate about the problem will help you weather the tough times. Starting a business is never easy and there are often hundreds of obstacles, big and small, that you face all the time. Passion not only helps you enjoy the good times, but it encourages you to see the obstacles as opportunities — to learn from your mistakes, accept criticism and maybe change your path when needs be. When you’re able to work through the challenges your business throws at you, the success you gain later on is even sweeter.
This focus on real world issues also helps you stay motivated when facing the tough realities of starting a business. Remember, a single piece of positive feedback from a user can keep you from giving it all up for an easier path. Knowing that you’re making a difference to not just your own life, but potentially the lives of many, is an extremely powerful motivator.
Lastly, finding that pain point and creating the cure will allow you to be more successful. If you’re able to build something that people not only want, but need to use, it will make your push into the market that much easier.
This article was originally posted here on Entrepreneur.com
(Infographic)The Do’s And Don’ts Of Naming Your Business
There’s a lot that goes into a company’s name.
Finding the right name for your business can be crucial to its success. If you’ve got a boring, vague name, then you might repel potential customers.
When it comes down to it, there are some major do’s and don’ts that go along with naming your company. For starters, keep things simple and short – a long name can confuse potential customers and won’t make a lasting impression on them.
Your name should also tell your story. Not only will this help people recognise your company but you’ll build the brand’s character.
Something a lot of people don’t think about is how their company’s name will sound in another language. Even if you’re in the early stages of building your company, who knows what could happen in the future. So create a name that sounds good and has a positive translation in any country. Next, always test your ideas before setting them in stone.
Ask potential customers to take a survey and compare your name with other companies in the same industry. Of course, you also must ensure that the name you came up is even available.
To learn how you can create the best name for your business, check out Business Backer‘s infographic below.
This article was originally posted here on Entrepreneur.com.
Fuel Your Hustle
These two practical goal posts will keep your start-up on track, even when things get tough and you start to lose traction.
Make sure you have a clear vision and a plan — something to chase and celebrate when targets are achieved.
When you start a new business, everything is exciting. You have a dream, something to work for. Once the business takes off, it’s easy to fall into a rat race of just going to work and reacting to challenges as they happen. Many established business owners get to a place where they wonder if it’s all worth the effort. Whenever I talk to entrepreneurs feeling this way, I always ask them what they are working towards.
Most times, they don’t have an answer.
No, I’m not going to give a motivational talk on how important goals are, but I do believe it’s important to work towards something. To chase something worthwhile. Is it a vision and mission statement? Maybe that fuels your energy, but there are two practical things that I can suggest to any entrepreneur to keep you on track, and keep you motivated with a reason to wake up in the morning.
1. A one-page business plan
The logic behind a business plan is great. It’s a plotted journey, with marked goals and targets. It gives you something to work on, and work towards. And you’ll definitely need one if you’re looking for financing. But very seldom does it actually become a real working document for the small business owner; business plans are too long-winded and rigid and don’t allow for the fast changes and flexibility you’re going to need when you’re running a business.
So, gut instinct is how most survive, and the plan goes into the middle drawer.
That doesn’t mean you don’t need a plan. It just means you need a different kind of plan — one that works for you at the stage you’re at. A one-pager plan that acts as a dynamic working document is where it’s at. The keyword here is dynamic.
Try to compile a one-pager of what you aim to achieve in the next year. Break it down per month and list the small steps that you will be taking to reach your bigger vision at the end of the year. This plan could include anything, but you should know that it will be your guide to what is important and what isn’t.
Work on it weekly, review it monthly and ensure that you are moving in the right direction. At the start of every month, review your plan and list your priorities for the month. If you hit a snag, stop, re-evaluate your plan, make changes and move on. It is not set in concrete. It is dynamic.
Too many entrepreneurs go to work each day and solve issues as they arise without planning proactively for what they want. Others view their business plan — all 100 pages of it — like it’s the Bible. Neither approach will get you very far.
The one-pager will be your plan, your guide. Keep it with you at all times so it can be as flexible as you need to be.
2. Your break-even figure
For most entrepreneurs, numbers are one of those complicated matters best left to others, although it needn’t be that way. And when it comes to one particular number, it cannot be that way: That number is the break-even figure. It’s the one number every entrepreneur must know. If you don’t have a break-even figure, how will you know if you’re succeeding or failing?
A break-even figure is the amount of sales you need to make in a month to cover all expenses and to make a target profit. If you can calculate this, then you have a number that you can chase every day — something that is measurable and understandable for the entrepreneur.
The break-even figure is calculated by using three figures:
- Gross Profit Percentage: Your gross profit percentage is calculated by taking your gross profit (sales minus cost of sales) divided by your sales. Let’s say you sell a product for R200 and the cost of that product is R150, then your gross profit will be R50. Your gross profit percentage therefore is 25% (gross profit (R50) divided by sales (R200).
- Overheads: Overheads are the total of all your fixed expenses each month. Examples include rent, salaries, Internet, fuel and all other costs that you need to pay, e.g. R100 000.
- Profit Target: This is the profit you would like to achieve in a month, e.g. R20 000.
Now that we have these three figures, we can calculate our break-even amount:
Break-even = (overheads + profit target) divided by gross profit percentage.
So, continuing the above example:
Break-even = (R100 000 + R20 000) / 25% = R480 000
This means that you must make sales of R480 000 per month to cover all your overheads and achieve your profit target.
If you have this figure you can now plan how to achieve this target and go out every day chasing a goal, rather than just crossing your fingers. One can take this number and divide it by the number of working days in a month to get to a daily target of sales. Also, make sure it’s on your one-page dynamic plan.
Sometimes, we just need basic things to give our journey meaning again. Something to chase and something to celebrate once we’ve achieved it (yes, make sure you celebrate). To have goals, a clear vision and a one-pager plan might sound like petty things when you run a business — but you might soon realise that you need these things to keep you going.
Insurances To Consider If You Are Starting Your Own Business
Below are just some of the insurances you need to consider if you are starting your own business.
Starting your own business is a brave and bold step. You will be joining many others in the journey of becoming your own boss, and this can be a stressful time. You will need to have a sound business plan in place, as well as other aspects that will secure both your business and your financial future. These include certain insurances that are geared toward insuring your salary, your investments and yourself.
All small business owners should look into taking out funeral insurance so that their family is not burdened and can pay for their funeral, investment insurance so that their money is protected and commercial insurance to protect your business and your property.
Below are just some of the insurances you need to consider if you are starting your own business.
General liability insurance
General liability insurance is important because it will protect you and your business from any possible legal action taken by customers. This insurance protects you in case of any injury to or damage to a customer which happened on your property.
It is also important if you manufacture products, but this would fall under product liability insurance. If a product harms a consumer, then you are legally responsible for expenses which means that having liability insurance will help immensely with costs. If you sell homemade cakes, toys for children or even clothing, liability insurance should be at the top of your list.
Now, you might not think that funeral plans are that important but, in fact, they are. Not only for you but for the employees you might have. Funeral cover pays your family a lump sum within 48 hours of your death so that they can pay for your funeral without having to worry about expenses.
As a small business owner, funeral plans make sense. You will likely be the sole breadwinner, which means that your family will be under considerable strain if you die. The same can be said of your employees. Their families will need to be able to pay for their funerals, and it will also ensure that employees stay loyal to your business.
Funeral cover is a benefit that many companies offer their employees to ensure they’re happy and satisfied in their roles.
If you own property or are leasing a building, property insurance is vital. This insurance covers your office equipment, the signage both inside and outside the building, all office furniture as well as your inventory. These will all be covered for disasters such as fire or a storm as well as in case of theft or damage.
However, it is important to note that if your business is based in your home, your homeowner’s insurance will not cover any business equipment. This means that you will have to take out additional insurance for your business equipment. You will also need to speak to your insurer about disaster coverage, especially if your business is based in an area that is prone to fires and floods. Property insurance is important because it will protect your business from incurring costs it cannot afford.
Commercial auto insurance
If you use a company car or have bought a car specifically for your business, you will need to take out commercial auto insurance. Just as homeowner’s insurance will not cover your business inventory, personal auto insurance will not cover a commercial or business vehicle. This is why commercial auto insurance is so important.
If your employees drive their own vehicles to and from work, you should try to ensure that they have personal auto insurance. And if they use their own vehicles for business reasons, you could ask your insurance provider about covering the risk as part of your general liability insurance. This will keep them safe in case of any accidents that might occur during their trip.
It is a good idea to purchase or hire a company car for your employees to use for any business trips so that your employees are safe and correctly insured.
Look after your staff and business
Along with funeral insurance, workers compensation insurance is important for ensuring your staff is covered for any eventuality. And it will show them that you value them as employees, which will keep them happy and content in their roles.
This insurance will cover medical bills, death and disability benefits if an employee is injured on the job or on your property as well as salary protection. If you offer these as separate packages, you will not have to worry about worker’s compensation insurance but you will need to speak to an insurance broker about this. Protecting your employees is the mark of a true company leader, and happy workers are also more productive.
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